Sensitivity to progress in talks between Ukraine and Russia is obvious for sure, and came along with expectation for some sort of Tuesday turnaround effort as noted in Monday night's remarks. Sustainability is the issue, and the proximity to a downside vacuum is clear on the charts, while at the same time many smaller stocks behaved 'as if' they were pretty exhausted yesterday.

Pexels

The 'ban' on Oil contracts with Russia being wound-down has 45 days, which I think was reasonably clever because it gives several weeks to arrange other sources (or increase domestic production, which I advocate) and even ending it before it starts, in-event the parties to the conflict find a settlement quickly. It is however questionable to distance almost 'everything', as now we're doing a reverse twist to Putin's leverage with oil and gas to Europe.

We're pulling-out a string of American icons, which were just the start of 1990 perestroika and that's an understandable response to what's happened. But if this isn't short-term, it negates the prospects of returning. For many Russians, these U.S. symbols were very helpful in motivating emulating American ways of life, and helpful in moving that society from communism / socialism toward capitalism. Yes huge morphing occurred as an autocratic regime suppressed freedom they were gaining in many ways for a couple decades. But we'll need to revitalize that longing for a Russia of freedom and opportunity ideally one day, which they definitely don't have now. A free Russia doesn't threaten us in any comparable way to this chaos, so that's hopefully the post-Putin goal.

Even if there is ceasefire and progress, Putin has shown his aggressive side, way beyond what was telegraphed by his previous adventures. And that may keep the U.S. away from future oil purchases anyway (it should), while most regular businesses might gingerly restart / resume suspended operations. For sure there is the toss-up between political desire and revenue practicality.

How this sorts-out can go several ways, and the stock market big-cap actions reflect that. While some focus will shift to the Fed next week, for now the 'war' remains the primary influence over the otherwise irregular market behavior. It may be near-certainty the Fed hikes rates next week, but a deep recession is of course the concern over $150 oil speculation, which is a separate issue as contrasted to stopping Russian exports. The oil price remains firm regardless but it's increasingly going to take a toll on discretionary spending, it matters.

The economic pressure on Russia seems like 'more pressure the better', but it also has economic impact on tens of thousands of workers in Russia that are employed or dependent upon the multinational companies for a living wage. If this situation is resolved and Putin is 'out', well I expect these companies very quickly to ramp-up again in Russia, 'but' all this leaves a bad taste both ways. Not everyone is taking a cue from McDonald's, who is keeping everyone they employ in Russia 'on' the payroll, which is expensive if this goes longer-term.

Nevertheless these sanctions and restrictions get the point across to average Russians, as do the messages home from Russian soldiers at a loss to grasp what they have been sent to do in Ukraine. Three Generals are now dead, but 2 of them are personally known by Putin (one led the captivity of Crimea). So it's pretty clear that Russia's corruption included the military, with appropriated money for modern equipment largely going to oligarchs (including Putin we'll presume) instead of leading edge communications or other gear. That's good for Ukraine of course in the fight, as they seem to be dealing with pitifully poor troops opposing them, and awful logistics as well as uncoordinated command (are they all drinking Vodka but getting no nourishment... reports say several groups of Russians have been raiding/looting supermarkets for basic food).

All this in-combination either moves the needle to get Russia to negotiate with a bit of sincerity that has been absent with their brutal attacks on civilians, and as advisors to Putin are reportedly telling him it was a 'mistake'. Maybe there will be some sign of an end to this, but he knows it can be 'his' end too.

A key may be a form of face-saving (not that Putin deserves that but he has a nuclear trigger, so there's that..) .. as Zelensky offered today, compromises on Russia staying in Crimea, perhaps in the Eastern provinces (fake republics of late), and his stating no desire to join NATO since being previously shunned.

GE late today became the latest (along with Pepsi and P&G) to limit or suspend activities in Russia, as the corporate 'great western retreat' persists.

In-sum: 

The Administration is continuing to improve its cognitive grasp of oil realities, and the need to ramp-up domestic energy production while keeping an eye on clean-air and power-generation projects going forward. Both are a realistic assessment the Energy Secretary outlined effectively.

The market has shown it's sensitivities to both oil shocks and amelioration of the causal factors, even as hints were presented in today's alternating shuffle.

The key to a significant rally would be a Ukraine/Russian 'rapprochement' that of course won't endear the parties, but might allow a gradual return to civility. I realize that's a tall order for the moment, but it beats the alternative if they are capable of doing that, with the next negotiating round planned for Thursday.